WASHINGTON—As expected, Federal Reserve Chair Jerome Powell stuck to the message when appearing before the House on Tuesday, saying economic data would otherwise suggest a rate cut is in order, but the Fed remains concerned over what President Trump’s tariffs might mean to inflation.
During his testimony before the House Financial Services Committee Powell said little that would suggest a rate cut is likely when the Fed holds its meetings next month, indicating it would likely be September before the effects of the tariffs can be better understood.
“If it turns out that inflation pressures do remain contained, we will get to a place where we cut rates sooner rather than later, but I wouldn’t want to point to a particular meeting,” Powell told the committee. “We do expect [inflation] to move [up] in the summer and if we see it not happening, we will learn from that.”
Watching Unemployment
The Fed chairman said the central bank is also paying close attention to unemployment as it looks to change rates.
“If we were to see the labor market meaningfully weaken in a way that was concerning, that would matter for that decision,” he said. “I don’t think we need to be in any rush because the economy is still strong, the labor market is strong.”
Powell has been criticized strongly by President Trump for not cutting rates, with the president last week posting on social media that Powell is a “Total and Complete Moron!”
Powell will testify today before the Senate as part of his semi-annual testimony.
America’s CUs Sends Letter
In advance of the hearings with Powell before the House and Senate, America’s Credit Unions President/CEO Jim Nussle reiterated strong opposition for the Federal Reserve Board’s proposed amendments to Regulation II and any reduction in the debit interchange fee cap.
According to the trade group, Nussle also stressed the commitment by credit unions to fighting fraud and improving credit union members’ resilience to scams, with the letter noting a recommendation that the Board “explore tools and solutions that can help credit union FedNow participants manage the unique risks associated with instant payments.”
America’s Credit Unions said it supports a framework for regulating digital assets that accommodate responsible innovation within the credit union industry but also expressed opposition to the creation of a central bank digital currency (CBDC).
In addition, the trade group told Congress it supports efforts to prohibit a CBDC, such as the Anti-CBDC Surveillance State Act that has been proposed in the House.
